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Introduction to The Body Shop Canada and Downsizing

The Consequences Human Cost of Downsizing

Looking at their Approach and How We would address it

Human Resources Management: The Importance of Involvement

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How can organizations ensure fairness and transparency when identifying key employees for retention and selecting others for termination?

A) By using objective criteria such as skills, performance, and job criticality. Conducting fair evaluations and clear communication with employees.

B) Not doing anything.

C) Doing something.

D) By establishing measures for criteria. (e.g hard goals and soft goals). Communicating clearly.

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The Body Shop to close 33 Canadian stores

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The Body Shop is shutting down 33 stores in Canada and stopping online sales. Some experts attribute the chain’s downfall to increased competition in the ethical-beauty space.

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Photo Courtesy of: (Victoria Grace Stunt/CBC)

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On Tuesday March 4th, 2024, the Canadian branch of The Body Shop had announced the will be:

closing 33 of its 105 stores in Canada

and laying off 200 of its 700 workers and ending online shopping (CBC 2024).

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Photo Courtesy of:  (Daniel Leal/AFP/Getty Images)

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Overall Changes in the Market -> Loss of competitiveness in the ethical beauty industry

Parent Company Wise, Changes in Ownership -> In November 2023, TBSI was sold to Aurelius, an equity company

Within Canada, Cash Pooling Money -> Shifting funds between TBSI and TBS Canada, which stopped when TBSI filed for administration

(Stechyon 2023)

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The Body Shop Canada was part of a wider effort of The Body Shop International to improve efficiency when the company was no longer efficient (could not pool cash properly) and competitive (could not compete within its market).

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Think back to the video: Do you think The Body Shop should have continued its online sales at a reduced rate? Or do you agree that the company was right in cutting back completely?

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By shutting down in-person stores, customers would have a harder time sampling and getting a first-hand experience browsing TBS' skin care products.

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This aligns with the issues we outlined earlier: Struggling ownership, difficulties funding, difficulties expanding markets.

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Out of the previously mentioned reasons we talked about, which do you think would be easiest to organize a restructuring for?

a) Economic Challenges

b) Technological Advancements

c) Global Compeitition

d) Workforce Changes

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TBSC' announcement that they will be closing stores comes after TBSI had announced filing for administration (similar to bankruptcy). This was one month prior. At the time TBSI had assured that Canadian operations would not be affected.

At the same time, Aurelius, the parent company was found it was behind paying its employees for weeks.

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What should HR focus on to prevent shock and confusion during downsizing?

A) Strategic hiring plans

B) Offering bonuses

C) Clear, timely, and honest communication

D) Increasing workloads

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Which of the following should HR implement to support employees who remain after downsizing?

A) Salary reductions and strict supervision

B) Extended working hours and new targets

C) Mental health support, workload management, and motivation strategies

D) Hiring new temporary staff immediately

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3. Which of the following is a key HR responsibility during downsizing?

A) Reducing team-building activities

B) Ignoring union agreements for faster action

C) Following labour laws, respecting policies and offering fair support

D) Promoting only senior staff

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After filing for creditor protection and closing 33 stores, The Body Shop Canada began searching for buyers in, blaming its parent company for financial troubles.

With more closures looming, employees likely faced job insecurity and low morale, which would have negatively affected performance.

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Which of the following is NOT a potential consequence of DOWNSIZING?

A. Psychological trauma

B. Increased employee commitment

C. The high human costs

D. Lower performance among employees.

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What challenges might arise when redistributing tasks among remaining employees, and how can management address these challenges effectively?

A) There are no challenges. Everything is fine and dandy.

B) Just forget it. There's too much to redistribute.

C) Increased workload and employee burnout. Management can provide proper training, adjust salaries, and ensure workload balance.

D) Increased workload and employee burnout. Management can be strategic in what they do.

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What are the potential risks and ethical considerations of replacing certain job roles with artificial intelligence and automation?

A) The psychological health and safety of workers will be at risk. They might be able to stay with moderate impact on the workforce.

B) I don't know.

C) There are none.

D) Job loss and reduced employee morale.

Ethical concerns include fairness, retraining opportunities, and long-term impacts on the workforce.

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The body shop's unfortunate situation can certainly be applied to our topic. Here are some ways:

Laying off 200 of the 700 employees fundamentally involved identifying key employees during the process. Positions that were not vital to the organization were ultimately terminated.

Various locations in the same cities were closed to cut operational costs. Evidently, this is a sign of restructuring. (e.g., 3 locations in 1 city)

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Since downsizing is going to involve moving operations back to the parent company, the remaining employees should have their roles reassigned to that focus.

This could involve digitizing certain job roles as mentioned previously.

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In the case of The Body Shop, early HR involvement in downsizing could have helped ease the transition by promoting better communication, involving employees, and planning roles more strategically.

When downsizing is handled thoughtfully, it can reduce negative impacts on staff and ultimately support long-term organizational performance

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In the context of The Body Shop's decision to close 33 stores and lay off 200 workers, which of the following risks best reflects the “Survivor Syndrome” faced by the remaining employees?

A. They may feel motivated to work harder to keep their jobs
B. They may experience improved job clarity due to less workforce congestion
C. They may suffer from burnout, stress, and lowered morale
D. They may receive better promotion opportunities immediately after the layoffs

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Sustainability in downsizing is not just about cutting costs; it's about preserving the organization’s ability to grow, adapt, and thrive long-term.

What The Body Shop did wrong:

Ending online shopping limits digital presence.

Layoffs and store closures without a clear innovation roadmap can affect brand growth.

Potential damage to employee trust and morale, affecting future talent attraction and retention.

To truly be sustainable, downsizing must be paired with systematic change, long-term vision, and a people-first approach, something The Body Shop could improve upon

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Which of the following reflects a strategic weakness in The Body Shop’s downsizing approach that could negatively impact its long-term sustainability?

A. Implementing workforce reduction before redesigning jobs
B. Ending online shopping, which limits future growth opportunities
C. Only closing a small portion of physical stores
D. Maintaining brand image through public announcements

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Does Aurelius going back on their word paint a promising picture for the future for other branches of the company? Why or why not?